The carbon market rebounded strongly

The prompt market responded with gains

Gas demand increased to 330MCM yesterday on a combination of low temperatures and weak wind generation.  Limited LNG send-out and ongoing exports to Belgium did not help the supply-demand situation.  An opening supply deficit of almost 20MCM on the GB gas system was never re-balanced on Monday and the system remained 10MCM short at close of business.  The prompt market responded with gains averaging 36.50p while within day and day ahead prices rose by 40.00 and 38.00p respectively.  Near futures contracts were not far behind, recording average gains of 28.00p while seasonal contracts for Summer and Winter 22 were up by almost as much to settle above 230.00p.

GB baseload power futures surged higher again

GB baseload power futures surged higher again on Monday, tracking strong gains in gas and emissions prices.  The front month is pushing towards £500/MWh. Monday’s settlement price of £490.25 is an all-time record high for a front month contract and Summer 22 broke the £200/MWh barrier which no summer contract has done before. Day ahead baseload eased marginally despite low wind forecast for today, but temperatures are forecast to rise above the seasonal norm.  With forecast warmer temperatures and increased wind availability from Wednesday onwards, the week ahead contract for Week 52 shed £25/MWh.

Crude oil prices slipped for a second consecutive session

Crude oil prices slipped for a second consecutive session on Monday as Brent crude settled at $71.52 a barrel.  The global benchmark had traded as low as $69.28 in early trading before rallying towards the close.  The U.S. benchmark, West Texas Intermediate, settled at $69.20 a barrel.  Concerns regarding the ongoing threat of the Omicron strain has seen some major countries announce further restrictions on travel.  A weaker dollar exchange index tempered the downward pressure on oil prices on the day.  The carbon market rebounded strongly from Friday’s heavy losses with EU ETS unit prices settling above €80.00 per tonne again on Monday.

Demand on the GB gas system remains elevated

Demand on the GB gas system remains elevated largely due to weak wind generation of just 1GW.  Gas-fired generation is drawing 100MCM of the current 340MCM demand but, in a reversal of yesterday’s situation, forecast deliveries are running 15MCM long this morning.  Imports via the Balgzand Bacton Line have increased, as have storage withdrawals, while exports via the Bacton Zeebrugge Inter-connector have fallen slightly.  The improved supply-demand balance has not yet been evidenced in prompt market trading but futures prices continue to burgeon with Q1 22 up by a further 26.00p to threaten the 400 pence per therm mark.      

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